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McKesson Health SolutionsThe State of Value-Based Reimbursement and the Transition from Volume to Value in 2014

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Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Seven Major Trends. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5

Seven Steps to Value-Based Care. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

How Can McKesson Help?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Introduction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Background. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Methodology. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Research Approach. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Survey Approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

Sample Design: Payers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Sample Design: Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Key Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

P4P Poised to Dominate but is Also the Most Challenging to Implement. . . . . 16

Detailed Findings. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Value-Based Care Continuum – Current State. . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Payment Models Currently Implemented Among Payers. . . . . . . . . . . . . . . . . . . 20

Payer and Provider Use of Tiered Provider Pricing. . . . . . . . . . . . . . . . . . . . . . . . . 21

Mix of Payment Models: Payers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Mix of Payment Models: Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Comparison of Difficulty in Implementing Payment Models. . . . . . . . . . . . . . . . . 26

Key Drivers of Difficulty in Implementing Payment Models. . . . . . . . . . . . . . . . . . 27

Value-Based Metrics Measured in Provider Organizations. . . . . . . . . . . . . . . . . . 28

Perceived Financial Impact of a Transition to Value-Based Care. . . . . . . . . . . . . 29

Reduction of Pricing to Payers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Top 3 Areas of Focus to Improve Overall Financial Performance. . . . . . . . . . . . . 32

Top Challenges to the Implementation and Success of Value–Based Reimbursement. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Is VBR Here to Stay?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

About ORC International. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

About McKesson. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Index of Figures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

Table of conTenTs


This white paper uses the following definitions.

PayerA health insurer/health plan that finances or reimburses the cost of health services.

ProviderA hospital or hospital system that provides healthcare services to patients. For clarity, this paper

does not refer to clinicians (see below) as providers.

HospitalSame as “provider.”

ClinicianA physician, nurse, or other healthcare professional who works directly with patients in a doctor’s

office, clinic, hospital, hospice, home setting, etc., as part of a provider network.

Collaborative RegionA region where one or two payers and hospitals are market leaders.

Fragmented RegionA region where there are multiple payers and hospitals and no clear market leaders.

DefiniTions


e can now say with certainty that healthcare delivery is moving in one direction:

towards value-based care. The affordability crisis is causing unprecedented

changes in the healthcare landscape, the most significant of which is the transition

from the current volume-based model to myriad models based on measures of value.

To remain relevant and competitive, payers, hospitals, health systems, and clinicians must

respond now to integrate value-based models into their existing systems. However, most of

these systems are already overburdened, inefficient, and poorly integrated (if they are integrated

at all). Without the appropriate investments in contemporary healthcare IT that enables value-

based care, existing systems will be pushed beyond the breaking point, and administration of

these models will exceed the human capacity to fund and manage them.

The winners will be those who act and collaborate decisively. But good decisions require timely

and accurate information. There is a strong need to benchmark and monitor the pace of change

in the payer-provider landscape, understand how key stakeholders are reacting, and know, to the

extent possible, how things will play out over the next several years. Indeed, this knowledge is

critical to the long-term success of payers and providers and, most importantly, to improving care

quality for patients and reducing healthcare costs for the nation.

Unfortunately, it hasn’t been clear what key stakeholders were (or were not) doing and how

they were faring in this maelstrom of change. To address that, McKesson commissioned ORC

International, a leading research and business intelligence firm with 15 offices worldwide and

strong healthcare expertise, to study the issue. We wanted to answer questions such as these:

• How are payers and providers reacting to industry change and demands?

• How far along are they in this transition?

David Nace, M.D.Vice President and Medical DirectorMcKesson Health Solutions

W

execuTive summary


execuTive summary

• What reimbursement models are they using?

• What are their key obstacles and concerns in the face of complex and sweeping change?

• What attributes align an institution with value-based reimbursement?

ORC conducted a national baseline research study on the state of the transition from volume

(fee-for-service) to value-based care. The study included a 20-minute online survey of high-

level executives within 114 payer and 350 provider organizations, representing a range of sizes

and regions.

Seven Major TrendsThe results are in, and there can be no question as to healthcare’s embrace of value-based

models. The bottom line: Most payers and providers expect value-based reimbursement to

overtake fee-for-service by the year 2020, but they face daunting complexity in integrating

complex reimbursement models, and say they have an urgent need for next-generation

healthcare IT to successfully transition to value-based models. Overall, the research identified

seven major trends:

1. Rapid adoption of VBR. The reimbursement landscape is changing faster than many

had anticipated, with payers and providers decidedly aligned on embracing payment

with value measures. Remarkably, 90% of payers and 81% of providers are already using

some mix of value-based reimbursement (VBR) combined with fee-for-service (FFS).

Stakeholders using mixed models are anticipating significant expansion in value-based

care, projecting that payment with some form of value measurement will make up two-

thirds of the market by 2020, up from one-third today. Providers using mixed models

expect FFS to decrease from about 56% today to 34% five years from now.

2. Collaborative regions are more aligned with VBR. Collaborative regions, where one

or two payers and providers stand out, are more aligned with VBR. Fragmented regions,

where there are multiple payers and providers and no clear market leaders, are more

aligned with FFS. Moreover, the larger the institution, the further along the continuum

towards VBR it falls.


3. Alignment with VBR is influenced by the care delivery model. Accountable Care

Organizations (ACOs) are significantly closer to VBR adoption than non-ACOs. Forty-

five percent of providers surveyed are part of an ACO. These providers are significantly

more likely to feel that the transition to VBR will have a positive financial impact on their

organizations compared to those not in an ACO. That said, 59% of those not in an ACO

anticipate joining one within five years.

4. Pay-for-Performance leads the pack. Of the existing value-based models, payers and

providers project that the proportion of their total business (inclusive of commercial and

Medicare) that is aligned with pay-for-performance (P4P) will experience the most growth.

Payers using a mix of reimbursement models say the proportion of their business aligned

with P4P will increase from 10% today to 18% in five years. Providers using a mix of

reimbursement models project their alignment with P4P will jump from 9% today to 21%

in five years.

5. Existing healthcare IT systems are not aligned with VBR. Though both payers and

providers predict that P4P will be a critical part of their reimbursement model, 15% of

payers and 22% of providers characterize P4P as “very difficult” or “extremely difficult” to

implement. They also rated Episode of Care/Bundled Payment and others (e.g., Shared

Savings) as very or extremely difficult. The key obstacles to implementing these value-

based models, payers and providers agree, are a lack of standards, analytical tools,

and the need for better business IT infrastructure and systems that support these

models—all while taking action to reduce administrative burdens and costs to remain

financially sound.

6. The primary obstacles payers and providers “urgently need” to address in order to

enable VBR are technology related. This is led by the need to integrate internal, vendor,

and collaborative IT systems (41% payers, 23% providers); and data collection, access,

and analytics (22% payers, 20% providers).

7. Technology to catalyze clinician engagement will be crucial to VBR’s success.

The largest proportion of payers and providers pointed to a lack of clinician buy-in and

engagement with VBR as the number one challenge to its success (20% of payers and

17% of providers). This underscores a broader need within the industry for tools that

enable clinician engagement with value-based models.

execuTive summary


Seven Steps to Value-Based CareMcKesson’s research identified seven key trends (above) that are evident in the transformation

from volume to value. Coincidentally, there are also seven key steps that payers and providers

can take to facilitate movement towards value-based design, reimbursement, and care.

These seven steps should be considered now because, as the 2014 State of Value-Based

Reimbursement study documents, the industry is at a tipping point. The study data indicates an

accelerating pace of change, and while FFS isn’t going away entirely, VBR is expected to eclipse

FFS-only models by 2020. For stakeholders, it’s a matter of taking action now or risking being left

behind, as dollars increasingly flow through value-based models. Here are seven steps you can

take today to help avoid falling behind:

1. Take the plunge together. Value-based delivery changes depend on value-based

payment changes. Who will make the first move? If payers decide to wait until the new

care delivery system is in place, and if providers decide to wait until they know they’ll get

paid for value-based care, neither will move forward. Instead, payers and providers need

to collaborate or at least align with each other as they take steps towards adopting value-

based payment models.

2. Build a critical mass. Multiple payers in a region are necessary to make it worthwhile for

providers to participate in VBR in an efficient and automated fashion. Otherwise, it’s like

launching a pilot program that is difficult to administer, inefficient, and not scalable.

To this end:

• Find many local partners. Align with other payers, hospital systems, and employers.

This study shows that healthcare is evolving in a regional fashion and will continue

to do so.

• Payers are well-positioned to take the lead, bringing together multiple providers to talk

about new types of reimbursement and what they’re trying to accomplish. Payers have

the capital, infrastructure, and relationships (with employers, providers, and regulators)

that allow them to invest in innovation and change through these partnerships.

• Find a neutral party. Convening an open forum for stakeholders to talk freely about

general ideas facilitated by a neutral party can be an effective approach. For example,

the neutral party could be a local non-profit organization, or a state or county agency.

In some cases, you could seek to participate in one of several federal initiatives, such

as the CPCI program or through the State Innovation Models grants being awarded

through CMS.

execuTive summary

http://innovation.cms.gov/initiatives/Comprehensive-Primary-Care-Initiative/

http://innovation.cms.gov/initiatives/state-innovations/


3. Reach out to employers. Employers are starting to embrace value-based care and

payment arrangements, particularly episode-based reimbursement. Many companies

are increasingly embracing health plan strategies that use financial incentives to hold

providers accountable. That’s a big leap from where they used to be. There’s no time

like the present to engage with employers in the discussion about value-based care and

payment. Employers, providers, and payers all need to educate employees (i.e., patients)

about value-based care so they understand it and can be part of the solution.

4. Find seed money. There has been a wave of grants to promote healthcare delivery

reform. Look for federal, state, and foundation grants for pilot projects on delivery system

design reform. In doing so, focus on one or two areas of reform to get value. Don’t try

to do everything at once. You can’t boil the ocean. Land and expand instead. Conduct

analytics to find out what your organization’s key pain points are, and focus only on the

top one. For example, some organizations start by focusing on using episode of care for

hip and knee replacements. Once they have that established, they target their next value-

based innovation.

5. Have a five-year plan. This study shows that in five years, VBR will outpace FFS.

Providers in particular tend to think in the short term, one pilot program at a time. But now

you need to think longer term. Moving from pilot to standard operations requires scale.

And technology can be an extremely effective enabler of scalability. Create a long term

strategic road map that details where your organization needs to be in five years, and how

it’s going to get there. Ensure the road map is flexible, however, because the environment

is changing fast. Revisit the road map annually and rationalize the five-year plan against

current industry trends.

6. Educate your people. Look for internal stakeholders within your organization, and

together, get educated about marketplace trends identified in this study and be aware

of what pilot studies are showing. Make sure you have benchmark data, because your

people will need to be convinced that this is a real and crucial opportunity. Look for other

health systems or plans that are ahead of you. Find champions in your organization (such

as medical directors) who can lead, are highly respected, already have a key leadership

role, and are diplomatic in building coalitions.

7. Adopt the new technology. Many believe the reason this change in healthcare delivery

is happening now is simply because we finally have the technology that can make it

execuTive summary


happen. Value-based reimbursement models, especially when implemented as mixed

reimbursement models—which is the current industry direction—are too complex and

costly to design, administer, manage, measure, and scale without the right tools. When

it comes to VBR, next-generation healthcare IT is crucial in four key areas: process

reengineering and automation, connectivity, analytics, and decision support.

• Process reengineering and automation is critical to the success of VBR. The

fast-growing mix of payment models is creating major complexity in the system. As the

industry approaches 2020, this will intensify and trigger increased administrative costs

that no organization can afford. To efficiently and effectively scale VBR, today’s FFS

processes must be reengineered, and hand-offs that might be manual must

be automated.

• Connectivity is key to enabling payer and provider organizations to synchronize and

streamline their own processes. It is also key to allowing effective communication

with other stakeholders who are sharing information as well as the clinical and

financial risk.

• Analytics help organizations support continual improvement by identifying problem

areas and assessing trends inside the organization and in interactions with other

stakeholders.

• Decision support helps payers, providers, clinicians, and even patients to use clinical

evidence, as well as provider network and cost implications, to help make informed

decisions at the point of care.

How does a payer, provider, clinician, or patient know what care is needed and when, let alone

where it should be provided, what it will cost, and who should pay for it? It’s not clear cut and

it’s not the same “patient-by-patient, plan-by-plan, send-me-a-fax” world. The only way to scale

mixed reimbursement models across markets is to understand and use the new technology. By

doing so, we can automate the complexity out of the human and organizational experience, and

engineer better decisions across the board—all for better health in 2020.

Value-based reimbursement is not only here; it’s here to stay. The vast majority of payers and

providers in this study say that value-based models are not a fad. The choices for payers,

providers, and clinicians are clear. And the time to act is now.

execuTive summary


How Can McKesson Help?At McKesson, we understand the challenges payers, providers, and clinicians face in the

transition to value-based models. The only way to confidently scale today’s value-based

reimbursement models is to automate the end-to-end process associated with them.

That’s why we’re investing in technology to enable VBR transformation, and it’s why our complete

portfolio of products and services is focused on automating and transforming complex financial

and clinical processes across healthcare to drive down costs and improve quality.

For more information on how McKesson can help your organization align with VBR, visit

McKessonHS.com.

Figure 1: McKesson Health Solution’s Comprehensive Reimbursement Technology Portfolio

execuTive summary

MHS Helps Automate & Transform Healthcare Reimbursement

NetworkAutomation

ContractAutomation

PaymentPolicy

Optimization

EpisodePayment

Waste &Abuse

Registration QA & Patient Flow

Patient Financial Clearance

Online Patient Payment

ClaimsManagement

RevenueCycle

Analytics

AuthorizationAutomation

MedicalAppropriateness

DiagnosticsManagement

Payer Provider

PatientOur portfolio enables our clients to be

more transparent with over 80M patients

4,200Provider Facilities

85%of hospital discharges

250+ managed care clients

160+million lives

90% of top 20 plans

69% of Blues

19 Medicaid states

75% of top 20 plans

1,900health plan connections

2,430hospitals

630,000physicians

2.3B financial transactionsprocessed last year

HIGHLYSCALABLE SaaS Platform & Network

DECISIONMANAGEMENT

RELAYHEALTHFINANCIAL

NETWORK & FINANCIAL MANAGEMENT

Copyright © 2014 McKesson Corporation and/or one of its subsidiaries.

http://www.McKessonHS.com


As the healthcare industry transitions from a volume- to a value-based reimbursement approach,

there have been enormous and rapid changes within the payer and provider landscape. The key

players have had to be inventive and experimental in their efforts to improve the quality of care,

while at the same time reducing their costs.

The government, and specifically the Affordable Care Act, has demanded innovation at a

rapid-fire pace. But many reimbursement models and ideas put forth, although promising, are

unproven and untested, and require technologies that are themselves untested on a larger scale.

BackgroundMcKesson set out to determine the state of the industry’s

transition from volume (fee-for-service) to value (value-based

care). We wanted to go beyond the anecdotal evidence to

gain a better understanding of how key stakeholders are

reacting to the demands on them, how they are managing

so far, what models and technology they are using, what

is working, and what they expect to roll out in the next

few years.

We decided to conduct a national study to explore these

questions. The knowledge we gain is critical to informing the

healthcare community—the payers, providers, and the vendors

that serve them—and ultimately to the long-term success of

payers and providers.

“Healthcare is moving rapidly to incorporate measures of value into payment models.”

“mcKesson’s baseline national research study is

critical to informing the healthcare

community on the state of value-based

reimbursement.”

inTroDucTion


Research ApproachMcKesson enlisted ORC International to conduct the national study on the transition to value-

based care. The project had several phases, beginning with a 20-minute online survey of key

stakeholders within both payer and provider organizations. ORC analysts poured over the results

to identify key findings, trends, and themes that are pertinent to industry stakeholders.

Survey ApproachSurvey design was built on the knowledge of population size and configuration in the payer and

provider space in order to build statistically reliable research results. To optimize the breadth and

representativeness of survey participants, respondents were recruited using large panels from an

established panel supplier within the target functions of payers and providers.

“The online survey of payers and providers represented a range of organization sizes and types.”

meTHoDology


Sample Designs: PayersTo include a wide range and representative

sample of study participants, respondents were

recruited using large panels from an established

panel supplier within the target functions of payers

and providers. All participants were executives

performing at the director level and above and

could speak to some of the overarching issues

related to value-based reimbursement occurring in

their organizations.

The online study included 114 payers,

representing a range of organization sizes,

with 32% covering 100,000 to 500,000 lives,

42% covering 500,000 to two million lives, and

26% covering two million or more lives. Payers

encompassed a range of regions as well, with

30% operating in payer-centric regions, 11% in

provider-centric regions, 28% in collaborative

regions, and 29% in fragmented regions.

The distinction between collaborative and

fragmented is that in a collaborative market there

are one or two payers and one or two providers

who are market leaders in the region. In a

fragmented system, there are more than one or

two payers and providers and no clear leaders.

meTHoDology

Total Payers (N=114)

Functions Recruited Into Study

• Medical Management

• Finance / Operations

• Network Management

• Technology

# Lives Covered

32%

42%

26%

100-‐500K

500K-‐2M

2M+

Region

30%

11%

28%

29%

Payer-‐Centric

Provider-‐Centric

Collaboration

Fragmented

Figure 2: Sample Design for Payers


Sample Designs: ProvidersMcKesson also studied 350 providers,

representing a similar range of size and scope.

From the sample of providers, 21% have less than

100 beds, 38% have between 101 and 250 beds,

and 40% have more than 250 beds.

As for region, 19% of providers are in payer-centric

regions, 26% are in provider-centric regions,

23% are in collaborative regions, and 28% are in

fragmented regions. It is important to note that

45% of providers are currently part of an ACO.

It was surprising to see that among those who are

not part of an ACO, 59% of providers anticipate

becoming part of an ACO within the next five

years. Whether or not a provider is part of an

ACO is important because it affects other factors,

such as the provider’s alignment with value-based

care systems.

We also found that 29% of providers have the

availability of a health plan within the organization,

and another 21% are part of a health plan offered

to the general population. Similarly, 63% of

providers are part of a health network or hospital

system (vs. independent hospitals).

meTHoDology

# Beds

21%

38%

40%

<100

101-‐250

>250

19%

26%

23%

28%

Payer-‐Centric

Provider-‐Centric

Collaboration

Fragmented

Region Total Providers (N=350)

Functions Recruited Into Study

• Medical Management

• Finance

• Technology

• Strategy / Business

• Contracting / Provider / Payer Relations

Figure 3: Sample Design for Providers


meTHoDology

Figure 4: Sample Design for Providers


P4P Poised to Dominate but is Also the Most Challenging to ImplementThe study demonstrated several dramatic themes in the transition occurring throughout

healthcare delivery. We asked payers and providers many of the same questions, and found

that in some instances, payers and providers are completely aligned in their expectations and

experiences surrounding value-based reimbursement. They are also in agreement on some of

the key issues that stakeholders face in the transition to value-based reimbursement.

Among the key findings, respondents project that pay-for-performance as a value-based model

will experience the most growth and encompass a larger share of the reimbursement market.

It is important to note, however, that both payers and providers rate the pay-for-performance

model with the highest level of difficulty to implement. In other words, the model that they

predict will be a critical part of their reimbursement model is also the toughest to

implement. They also rate a shared savings model as highly difficult to implement.

“Pay-for-performance will experience the most growth of all value-based models.”

Key finDings


When asked what factors make these models difficult to implement, both providers and payers

state that the key obstacles are technology related. They are concerned about not having the

ability to measure and analyze, not having the infrastructure to support pay-for-performance, and

a lack of systems to capture data.

Both payers and providers state that the tools they most urgently need to successfully implement

value-based reimbursement are those that help clinicians understand and measure performance

against quality and cost metrics.

Payers and providers are surprisingly aligned regarding the urgent need for these tools. In

particular, both stakeholders believe the most critical tool to the success of value-based

reimbursement is one that helps clinicians make decisions based on clinical evidence combined

with member eligibility benefits and coverage information.

Key finDings


Value-Based Care Continuum – Current StatePayers and providers were asked to place themselves on a continuum of care, from FFS at

one end and VBR at the other. We found that the larger the institution, the further along the

continuum towards VBR they fall.

The data also shows that more collaborative regions are closer to VBR, whereas those in

fragmented regions place themselves closer to FFS models. Similarly, ACOs are significantly

closer to VBR than non-ACOs.

When asked how they feel they have fared in the transition to a value-based model, 64% of

payers and 62% of providers feel they are on par with the rest of the industry, whereas 12%

of payers and 16% of providers say they are behind. About a quarter of payers and providers say

they are ahead.

DeTaileD finDings


“large and more collaborative payers and providers are ahead of the curve in using value-based reimbursements.”

DeTaileD finDings

Figure 5: Value-Based Care Continuum, Current State


Payment Models Currently Implemented Among PayersPayers are implementing a combination of payment models and the majority continue to use

fee-for-service models.

Among value-based reimbursement models, the most widely used models are pay for

performance (used by 65% of payers) and capitation, global payment, or total cost of care

payment (used by 64% of payers).

Following close behind in popularity is episode of

care/bundled payment, with 59% implementing

these models. That’s followed by shared savings

with upside, with 46% implementing. Shared

savings with upside and downside is the least

popular model, implemented by only 29%.

Payers in collaborative regions are significantly

more likely to implement capitation/global payment compared to those in payer- and provider-

centric regions. Larger payers are more likely to implement pay-for-performance models and

shared savings with upside only.

“more than two-thirds of payers use pay-for-performance, capitation, global payment or total cost of payment value-based models of reimbursement.”

DeTaileD finDings

Figure 6: Payment Models Currently Implemented Among Payers

# Lives Covered Region TypeTotal Payers 100-

500k500k-2M 2M+ Payer-

CentricProvider-Centric

Collabor-ation

Frag-mented

A B C D E F G

Fee-for-service 97% 92% 93% 94% 92% 94% 94%

Pay-for-performance (P4P) 53 69 73 65 50 69 73

Capitation, global payment, or total cost of care payment

67 65 60 56 25 81D 70

Episode of care/bundled payment 64 52 63 65 58 69 45

Shared savings with upside 33 46 60A 44 25 53 52

Shared savings with upside and downside 36 23 30 32 33 31 21

P4P and Capitation/Global Payment are the Most Commonly Implemented VBR Models Among PayersPayers in collaborative regions are significantly more likely to implement capitation/global payment relative to those in payer and provider centric regions, whereas large payers are significantly more likely to implement P4P and shared savings with upside only.

Base: Total Payers (N=114); Lives: 100-500K (n=36), 500-2M (n=48), 2M+ (n=30); Region: Payer-Centric (n=34), Provider-Centric (n=12**), Collaboration (n=32), Fragmented (n=33)(Payer) B1. Please select the type of payment arrangements that are implemented with your provider network

Payment Models Currently Implemented Among Payers

94%

65%

64%

59%

46%

29%

$

Letter indicates significant difference at 95% level of confidence.

**Caution: Very low base size.12 McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating


Payer and Provider Use of Tiered Provider PricingMore than two-thirds of payers are currently using tiered provider pricing, defined as a network

structure geared toward encouraging patients to use higher value, lower cost providers. The

majority of payers—68%—are currently doing this. Of payers who aren’t using tiered provider

pricing, about half expect to be doing so in two to three years.

Among providers, fewer than half report participating in tiered pricing, and of those who aren’t,

half expect to do so in the next two to three years. The fact that fewer providers than payers

report participating in tiered pricing suggests that there is a subset of providers emerging as key

partners for payers. In all likelihood, these providers are those who can demonstrate high quality,

low cost care.

“The majority of payers are encouraging patients to use higher value, lower cost providers or tiered provider pricing.”

DeTaileD finDings

Base: Total Payers (N=114); Tiered pricing not used (n=27*)(Payer) B3. Is tiered provider pricing and/or narrow networks a part of your current provider network strategy? This typically involves a network structure geared towards encouraging patients to use higher

value / lower cost providers. (Payer) B4. Do you expect that your health plan will offer a tiered provider pricing and/or narrow network 2-3 years from now?

Payer Use of Tiered Provider Pricing

Tiered Pricing is Part of CurrentProvider Network Strategy

Yes68% No

24%

Don't know

9%

TotalPayers

Anticipate Offering Tiered Pricing in Next 2-3 Years$

48%

33%

19%

(n=27*)

Yes

No

Don't know

**Caution: Very low base size.

The Already High Rate of Tiered Provider Pricing is Expected to Grow by Over Ten Percent

13 McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating

Base: Total Payers (N=114); Tiered pricing not used (n=27*)(Payer) B3. Is tiered provider pricing and/or narrow networks a part of your current provider network strategy? This typically involves a network structure geared towards encouraging patients to use higher

value / lower cost providers. (Payer) B4. Do you expect that your health plan will offer a tiered provider pricing and/or narrow network 2-3 years from now?

Payer Use of Tiered Provider Pricing

Tiered Pricing is Part of CurrentProvider Network Strategy

Yes68% No

24%

Don't know

9%

TotalPayers

Anticipate Offering Tiered Pricing in Next 2-3 Years$

48%

33%

19%

(n=27*)

Yes

No

Don't know

**Caution: Very low base size.

The Already High Rate of Tiered Provider Pricing is Expected to Grow by Over Ten Percent


Figure 7: Payer Use of Tiered Provider Pricing

Figure 8: Provider Use of Tiered Pricing and/or Narrow Networks

Under Half of Providers Currently Participating in Tiered Pricing Networks, Less Than Payers

Base: Total Providers (N=350); Tiered pricing not used (n=145)(Provider) B5. Does your institution participate in tiered provider pricing and/or narrow networks with payers? This typically involves payers

contracting with providers in a tiered network structure geared towards encouraging patients to use higher value / lower cost providers. (Provider) B6. Do you expect that your institution will participate in payer tiered provider pricing and/or narrow networks 2-3 years from now?

Provider Participation in Tiered Pricing and/or Narrow Networks With PayersTiered Pricing is Part of Current

Provider Network StrategyAnd/or Narrow Networks With Payers

Yes47%

No41%

Don't know11%

TotalProviders

Anticipate Offering Tiered Pricing in Next 2-3 Years

50%

29%

21%

(n=145)

Yes

No

Don't know

The fact that fewer providers report participating in tiered pricing than payers suggests that there is a subset of providers emerging as key partners for payers. In all likelihood, these providers are those than can demonstrate high quality / low cost care.

McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating14

Under Half of Providers Currently Participating in Tiered Pricing Networks, Less Than Payers

Base: Total Providers (N=350); Tiered pricing not used (n=145)(Provider) B5. Does your institution participate in tiered provider pricing and/or narrow networks with payers? This typically involves payers

contracting with providers in a tiered network structure geared towards encouraging patients to use higher value / lower cost providers. (Provider) B6. Do you expect that your institution will participate in payer tiered provider pricing and/or narrow networks 2-3 years from now?

Provider Participation in Tiered Pricing and/or Narrow Networks With PayersTiered Pricing is Part of Current

Provider Network StrategyAnd/or Narrow Networks With Payers

Yes47%

No41%

Don't know11%

TotalProviders

Anticipate Offering Tiered Pricing in Next 2-3 Years

50%

29%

21%

(n=145)

Yes

No

Don't know

The fact that fewer providers report participating in tiered pricing than payers suggests that there is a subset of providers emerging as key partners for payers. In all likelihood, these providers are those than can demonstrate high quality / low cost care.

McKesson Sponsored Research Conducted February 2014 by ORC International with 350 providers and 114 payers participating14


Mix of Payment Models: PayersToday, 90% of payers offer a mix of fee-for-service and other reimbursement models, and

only 3% offer fee-for-service only. We asked payers who used mixed models to allocate the

proportion of their total reimbursements among the models they use. On average, they allocate

56% to fee-for-service reimbursement, 17% to capitation, 10% to pay-for-performance, and

smaller proportions to episode of care, global payment, and other models.

When projecting into the near future, however, participants expect the proportion of fee-for-

service payments to decrease significantly, from 56% today to 32% five years from now. Much of

that share will be taken up by the pay-for-performance model, which payers predict will increase

from 10% today to 18% in five years.

Payers also predict that the share of payments through episode of care and bundled payment

models will rise. Other models also show an increase, but payers predict that they will still make

up a small proportion of total payments in five years.

There are some differences among the sample of payers. Those in collaborative regions currently

have a higher proportion of pay-for-performance reimbursements than those in fragmented

regions, and they expect to see more growth in pay-for-performance than those in fragmented

regions. Similarly, the larger the payer, the more likely they are to expect pay-for-performance

reimbursements to grow.

“This study found that 90% of payers and 81% of providers are already deploying some mix of value-based reimbursement combined with fee for service.”

DeTaileD finDings


DeTaileD finDings

Figure 9: Payers’ Mix of Payment Models


Mix of Payment Models: ProvidersProviders’ allocation of the proportion of reimbursements associated with different payment

models is remarkably similar to that of payers. Providers allocate, on average, 57% for fee-

for-service reimbursement but predict that the proportion will decrease dramatically to 34% in

five years. They predict that pay-for-performance will jump from 9% today to 21% five years

from now.

Smaller providers are more likely to report that fee-for-service makes up a higher proportion of

their reimbursements. On the flip side, the larger the organization, the more likely it is to report

that other models, particularly capitation and pay-for-performance, make up a higher proportion

of its reimbursement. This finding underscores the role that institution size plays in VBR.

Likewise, if the institution is not part of an integrated delivery network or an ACO, it is more likely

to state that a higher proportion of its reimbursement is fee-for-service. Those in collaborative

regions are more likely to point to having shared savings as a part of their mix than those in

fragmented regions.

“Providers are aligned with payers on embracing payment with value measures.”

DeTaileD finDings


DeTaileD finDings

Figure 10: Providers’ Mix of Payment Models


Comparison of Difficulty in Implementing Payment ModelsBoth payers and providers state that although they expect pay-for-performance to be more

common, they will have the most difficulty in implementing this model. They also rate the shared

savings model as very or extremely difficult to implement.

Among respondents who have combined models, 15% of payers and 22% of providers rate the

pay-for-performance model as very or extremely difficult to implement. The consistency in their

answers is remarkable. Medium-sized providers are twice as likely as large providers to rate pay-

for-performance models as very or extremely difficult to implement.

“P4P is poised to dominate, but payers and providers agree that it is the most challenging to implement.”

DeTaileD finDings

Figure 11: Comparison of Difficulty in Implementing Payment Models

Comparison of Difficulty in Implementing Payment Model (% rated extremely/very difficult – 9,10 on 10-pt scale)

15%

9%

5%

3%

2%

15%

Pay for Performance

Episode of Care Payment/Bundled Payment

Capitation

Fee-‐for-‐Service only

Global Payment

Other (e.g. Shared Savings)

Payers who are other than fee-‐for-‐service only

Providers who are other than fee-‐for-‐service only

22%

15%

5%

4%

9%

22%

Pay for Performance

Episode of Care/Bundled

Capitation

Fee-‐for-‐Service only

Global Payment

Other (e.g. Shared Savings)

-‐ Difficult to standardize -‐ Difficult to measure/ analyze

-‐ Infrastructure/systems to capture data

Key Reasons

-‐ Difficult to standardize -‐ Allocation of payment / how to split

-‐ Infrastructure/systems to capture data


Standardization, Analysis and Lack of IT Infrastructure/Systems are the Key Drivers of Difficulty in Implementing P4PIT Infrastructure/Systems also key drivers of difficulty in implementing capitation and “Other (e.g. shared savings/gain-sharing)”

Base: Rated model as difficult (n=variable)(Payer) B8; (Provider) B10. You rated the below model(s) as difficult. Please explain why you feel this way.

Key Drivers of Difficulty in Implementing Payment Models

Top Reasons find Fee-for-Service onlyto be difficult:

Payers Providers

(n=7**) (n=28*)

Difficult to get paid 14% 14%Drives req. for constant inc. vol. 14 4Difficult meet metrics/hit 100% 14 -Complex system/must

coordinate many pieces 14 -Does not allow variation in Tx 14 -Being phased out - 14

Top Reasons find Capitationto be difficult:

Payers Providers

(n=7**) (n=28*)

Resistance from providers/CGs 29% 7%Infrastructure/systems to

capture data 14 7Budget planning/staying within

budget - 11Requires care integration/

coordinating all parties - 11

Top Reasons find Global Paymentto be difficult:

Payers Providers

(n=9**) (n=31)

Allocation of pmnt/how to split 11% 19%Complex system/must

coordinate many pieces 11 6Resistance from providers/CGs 11 6

Mandate/Medicare demanding 11 6Dependent on action of pt/CG/

out of provider's control 11 -Contract issues 11 -

Top Reasons find Episode of Care/Bundled Payment to be difficult:

Payers Providers

(n=11**) (n=45)

Allocation of pmnt/how to split 9% 27%Difficult to control costs 9 4Contract issues 9 4Difficult to standardize 9 2Complex system/must

coordinate many pieces 9 -Requires care integration/coordinating all parties - 11

Top Reasons find Pay for Performanceto be difficult:

Payers Providers

(n=25*) (n=65)

Difficult to standardize 24% 20%Difficult to measure/analyze 20 11Infrastructure/systems to

capture data 12 6Difficult meet metrics/hit 100% 12 3Difficult to implement 12 -

Dependent on action of pt/CG/ out of provider's control 4 14

Top Reasons find Otherto be difficult:

Payers Providers

(n=11**) (n=18**)

Difficult to standardize 27% 6%Infrastructure/systems to

capture data 18 6Allocation of pmnt/how to split 18 -Determining costs/uneven cost

structures - 17Difficult to determine savings - 17Contract issues - 11

$

*Caution: Low base size**Caution: Very low base size.


Key Drivers of Difficulty in Implementing Payment ModelsTechnology might be a major impediment to implementing payment models. When respondents

rated a model as very difficult, they were asked to explain what factors made it hard to

implement. Some key problems they cite with the implementation of pay-for-performance

include: It is difficult to standardize, difficult to measure/analyze, and they have a lack of

infrastructure or systems to capture data.

Both payers and providers point to these technology issues as major obstacles. But providers are

also struggling with how to allocate the payments among the various stakeholders, especially

with episode of care and bundled payments.

“all key obstacles to implementing pay-for-performance are technology related, led by the need to integrate internal, vendor and collaborative iT systems.”

DeTaileD finDings

Figure 12: Key Drivers of Difficulty in Implementing Payment Models


Value-Based Metrics Measured in Provider OrganizationsAbout three-quarters of providers are already implementing a number of value-based care

metrics including patient experience, mortality measures, healthcare associated infection

measures, clinical process of care measures, and patient safety measures.

However, a minority—only 37%—are measuring cost efficiency. Cost efficiency is a critical

measure, and though it is uncommon today, 47% of providers not using these metrics expect to

be implementing them within two to three years.

“only 37% of providers have implemented cost efficiency measures.”

DeTaileD finDings

Measuring Value-Based Care: Metrics Today are Clinical, Safety and Experience RelatedWhile cost efficiency measures are uncommon today, the majority of providers anticipate these metrics will be in place within 2-3 years.

Base: Total Providers (N=350)(Provider) B1. Which of the following value-based metrics is your organization currently measured on and how do you think that will change 2-3 years from now?

Value-Based Metrics Measured in Provider Organizations

79% 78% 76% 73% 71%

37%

17% 16% 18% 22% 21%

47%

2% 3% 2% 2% 4%7%

2% 3% 4% 3% 4% 9%

Patient Experience measures

Mortality measures

Healthcare Associated

Infection measures

Clinical Process of

Care measures

Patient Safety

measures

Cost Efficiency measures

Today 2-3 years from now Neither today nor 2-3 years from now Don’t know

Current and Future Measures in Organization


Measuring Value-Based Care: Metrics Today are Clinical, Safety and Experience RelatedWhile cost efficiency measures are uncommon today, the majority of providers anticipate these metrics will be in place within 2-3 years.

Base: Total Providers (N=350)(Provider) B1. Which of the following value-based metrics is your organization currently measured on and how do you think that will change 2-3 years from now?

Value-Based Metrics Measured in Provider Organizations

79% 78% 76% 73% 71%

37%

17% 16% 18% 22% 21%

47%

2% 3% 2% 2% 4%7%

2% 3% 4% 3% 4% 9%

Patient Experience measures

Mortality measures

Healthcare Associated

Infection measures

Clinical Process of

Care measures

Patient Safety

measures

Cost Efficiency measures

Today 2-3 years from now Neither today nor 2-3 years from now Don’t know

Current and Future Measures in Organization


Figure 13: Value-Based Metrics Measured in Provider Organizations


Perceived Financial Impact of a Transition to Value-Based CarePayers and providers have different views on how value-based

reimbursement models will impact the financial health of their

organization. Nearly 60% of payers believe that making this

transition to value-based reimbursement will have a positive

impact on their organization financially.

Significantly fewer providers, only 35%, think that value-based

models will have a positive financial impact on them. That

difference is even greater among small providers (only 29% of

whom said it will be a positive step, compared to 40% of large

providers). This difference might reflect the notion that larger

providers are more prepared for the transition and feel they can

sail through it more easily.

It’s also interesting to note that providers that are part of an

ACO are significantly more likely to feel that this transition will

have a positive financial impact than those not part of an ACO.

This suggests that being part of an ACO makes a provider

more aligned with the financial goals of the ACO.

“Payers and providers differ on the financial impact of vbr on their organizations, with two-thirds of providers worrying that it will have a negative impact.”

DeTaileD finDings


# of beds Part of ACO

59%35% 29% 32% 40% 41%

30%

17%

45% 48% 49%39% 37%

51%

Total Payers

Total Providers

<100 101-250 >250 Yes No

Payers are Significantly More Likely than Providers to Believe a Transition to VBR Will Have a Positive Financial Impact on the OrganizationProviders who are not part of an ACO are the most likely to anticipate a negative financial impact.

Base: Total Payers (N=114); Total Providers (N=350), Beds: <100 (n=75), 101-250 (n=134), 250+ (n=141); ACO yes (n=157), no (n=193)(Payer) B9; (Provider) B12. Which of the following best describes how you feel a transition to value-based care would/will impact your organization financially?

Perceived Financial Impact of a Transition to Value Based Care

Positive impact on profitability

Negative impact on profitability

$

It would have no significant impact 25% 21% 23% 19% 21% 22% 20%


A B C D E

E

D


DeTaileD finDings

Figure 14: Perceived Financial Impact of a Transition to Value-Based Care


Reduction of Pricing to Payers by >20% in Last 12 months

15%

73%

11%

Yes

No

Don’t know

Actions taken to be financially sound Reduce costs 44% Streamline/improve processes 39 Increase volume of patients/Reduce readmissions 13 Don’t know 20

Reduction of Pricing to PayersIn the current healthcare climate, some providers have been forced to reduce their pricing to

payers. The study asked, “Have you had to reduce your pricing to payers by more than 20% in

the last 12 months?” In fact, the study found that the majority—73%—have not reduced pricing by

more than 20% in the last year.

But 15% say they had, and though not a

majority, this still represents a significant

number of providers. When those providers

who have reduced pricing by 20% or more

were asked what their institution was doing

to remain financially sound, 44% say they are

reducing costs, and 39% are streamlining and

improving processes.

Technology plays a large role in both of these cost-saving approaches.

“a small but significant percentage of providers have been forced to reduce their pricing to payers by more than 20% in the last year.”

DeTaileD finDings

Figure 15: Reduction of Pricing to Payers


Top 3 Areas of Focus to Improve Overall Financial PerformanceProviders were asked what their organizations’ top three areas of focus are to improve its

overall financial performance. About two-thirds of the respondents rank revenue capture and

clinical outcomes as their first or second top areas of focus. Administrative costs are ranked

one or two by about 40% of providers. Consumer engagement is ranked first or second by

only 28% of providers.

DeTaileD finDings

Figure 16: Top 3 Areas of Focus to Improve Overall Financial Performance

Most Common Areas of Priority for Financial Performance are Revenue Capture and Clinical Outcomes

Base: Total Providers (N=350)(Provider) B11. What would you say are your organization’s top 3 areas of focus to improve overall financial performance?

Total Providers(N=350)

My Organization’s Top 3 Areas of Focus to Improve Overall Financial Performance

Revenue capture

Clinical outcomes

Administrative costs

Consumer engagement

Other

37%

35%

19%

8%

2%

26%

29%

23%

20%

Rank 1 Rank 2


“revenue capture tops providers’ lists to improve financial performance.”


Total Payers $ % Payer Respondents Who Rated Issue the Highest (Most Significant Obstacle to the Success of VBR)

20%

13%

12%

11%

10%

9%

8%

7%

6%

4%

1%

Buy-‐in / engagement with VBR on the part of clinicians

Integration of our providers' various IT systems (within our own system & outside)

Integrating my organization's systems with providers' EHR

Cost of implementing required IT platforms

Ability to model the financial risk of VBR arrangements

Integrating our organization's IT platforms with those of our providers

Access to the right data

Integrating existing IT platforms within my organization

Having systems capable of administering VBR programs and payments

Performance Analytics

Patient engagement/understanding of VBR benefit plan & network

Performance analytics

Top Challenges to the Implementation and Success of Value–Based ReimbursementTo understand the biggest hurdles to implementing value-based reimbursement, payers and

providers were provided with a list of issues and asked to rate how much of an obstacle each

posed to success.

The single-most significant obstacle for both payers and providers is obtaining buy-in and

engagement with value-based reimbursement on the part of the clinicians. However, in

aggregate, more payers are likely to select integration issues as an obstacle, such as integration

with providers’ various IT systems and integration of their own organizations’ systems with their

providers’ EHR systems. Other highly ranked challenges are patient understanding of value-

based reimbursement as well as payment within bundled and capitated models.

“clinician engagement is a challenge that must be overcome for vbr to succeed.”

DeTaileD finDings

Figure 17: Payers’ Top Challenges to the Implementation and Success of Value–Based Reimbursement


17%

13%

11%

10%

9%

8%

8%

6%

6%

6%

5%

Buy-‐in / engagement with VBR on the part of healthcare clinicians

Patient engagement with/understanding of VBR benefit plan & network

Can pay other providers as part of bundle/capitated value based model

Can reconcile & adjust cost structure to implement new revenue models

Interoperability of our EHR with internal and external systems

Integration of my institution’s IT platforms w/our payers or other providers

Access to the right data

Performance Analytics

Ability to measure performance against value-‐based metrics

Can share performance results w/payers, so can pay against those metrics

Can differentiate my system/hospital within narrow networks of payers

Total Providers

% Provider Respondents Who Rated Issue the Highest (Most Significant Obstacle to the Success of VBR)

Performance analytics

DeTaileD finDings

Figure 18: Providers’ Top Challenges to the Implementation and Success of Value–Based Reimbursement


Majority of Providers Believe VBR Is Here to StayLarger providers are significantly more likely believe VBR is here to stay relative to smaller providers; providers in collaborative regions are more likely than their counterparts in fragmented regions.

Base: Total Providers (N=350)(Provider) E7. Please select the option that you agree most with: I believe value-based care models are ... Here to stay, Just a fad


Opinions on the Future of Value-Based Reimbursement

85%72%

87% 89% 87% 87% 90%79%

15%28%

13% 11% 13% 13% 10%21%

Total Providers

<100 101-250 >250 Payer Centric

Provider Centric

Collaboration Fragmented

Just a Fad

Here to Stay

# of beds

A B C

Region

D E F G

A A

BC

G

F


Majority of Providers Believe VBR Is Here to StayLarger providers are significantly more likely believe VBR is here to stay relative to smaller providers; providers in collaborative regions are more likely than their counterparts in fragmented regions.

Base: Total Providers (N=350)(Provider) E7. Please select the option that you agree most with: I believe value-based care models are ... Here to stay, Just a fad


Opinions on the Future of Value-Based Reimbursement

85%72%

87% 89% 87% 87% 90%79%

15%28%

13% 11% 13% 13% 10%21%

Total Providers

<100 101-250 >250 Payer Centric

Provider Centric

Collaboration Fragmented

Just a Fad

Here to Stay

# of beds

A B C

Region

D E F G

A A

BC

G

F


Is VBR Here to Stay?This is, of course, the big question. The vast

majority of providers say that value-based

models are here to stay and are not a fad.

Those who are less likely to think these models

are permanent tend to be in smaller institutions

or in fragmented regions.

About one-third of those in systems with under

100 beds say value-based models are just

a fad.

DeTaileD finDings

Figure 19: Is VBR Here to Stay?

“The vast majority of providers believe value-based reimbursement is not just a fad.”


About ORC InternationalORC International is a research and business intelligence firm with 15 offices worldwide. The firm

provides organizations with insight to support business growth and performance, specializing in

the areas of Customer Equity, Employee Engagement, Marketing, and Strategy Development.

ORC International’s aim is to engage, empower, and elevate clients’ market knowledge to

become innovators in their fields, to capitalize on new opportunities, and to drive results, all

through a unique, integrated approach—a combination of passionate researchers and industry

experts paired with bespoke technology platforms and research science. For more information,

please visit www.ORCInternational.com.

About McKessonMcKesson Corporation, currently ranked 15th on the FORTUNE 500, is a healthcare services

and information technology company dedicated to making the business of healthcare run

better. McKesson partners with payers, hospitals, physician offices, pharmacies, pharmaceutical

companies and others across the spectrum of care to build healthier organizations that deliver

better care to patients in every setting. McKesson helps its customers improve their financial,

operational, and clinical performance with solutions that include pharmaceutical and medical-

surgical supply management, healthcare information technology, and business and clinical

services. For more information, visit www.mckesson.com.

http://www.ORCInternational.com

http://www.mckesson.com


Figure 1: McKesson Health Solution’s Comprehensive Reimbursement Technology Portfolio. . . . . . . . . . . . . . . . . . . . . . . . 10

Figure 2: Sample Design for Payers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Figure 3: Sample Design for Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14

Figure 4: Sample Design for Providers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Figure 5: Value-Based Care Continuum, Current State. . . . . . . . . . . . . . . . . . . . . . . . 19

Figure 6: Payment Models Currently Implemented Among Payers. . . . . . . . . . . . . . 20

Figure 7: Payer Use of Tiered Provider Pricing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Figure 8: Provider Use of Tiered Pricing and/or Narrow Networks. . . . . . . . . . . . . 21

Figure 9: Payers’ Mix of Payment Models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Figure 10: Providers’ Mix of Payment Models. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Figure 11: Comparison of Difficulty in Implementing Payment Model. . . . . . . . . . . 26

Figure 12: Key Drivers of Difficulty in Implementing Payment Models. . . . . . . . . . . 27

Figure 13: Value-Based Metrics Measured in Provider Organizations. . . . . . . . . . . . 28

Figure 14: Perceived Financial Impact of a Transition to Value-Based Care. . . . . . 30

Figure 15: Reduction of Pricing to Payers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Figure 16: Top 3 Areas of Focus to Improve Overall Financial Performance. . . . . . 31

Figure 17: Payers’ Top Challenges to the Implementation and Success of Value–Based Reimbursement. . . . . . . . . . . . . . . . . 33

Figure 18: Providers’ Top Challenges to the Implementation and Success of Value–Based Reimbursement. . . . . . . . . . . . . . . . . 34

Figure 19: Is VBR Here to Stay?. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

inDex of figures

Entire contents © McKesson Corporation

http://www.McKesson.com

http://www.McKessonHealthSolutions.com

http://www.MHSvbrstudy.com

http://www.McKesson.com

http://www.McKessonHealthSolutions.com

http://www.MHSvbrstudy.com

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